Article written by Antonia Tolich, Consultant for Liquor & Tobacco at IRI, for the November issue of National Liquor News, out soon.
We have continued to see the clear migration of sales to e-commerce in line with trends across Australian retail, with online shopping behaviour being embedded across all retail, as consumers embrace digital convenience off the back of COVID.
Total online sales are now sitting at $41.5B in the last year and growing five times faster YOY than overall retail. 2021 saw a significant increase in FMCG online penetration, which has been a major growth driver amid reduced dollars per buyer, with penetration now sitting at nearly 51 per cent. Online alcohol sales, which has typically been underpenetrated, saw an uplift in 2021 versus pre-COVID, driven by penetration gains in younger pre-family cohorts. Convincing consumers to try online shopping continues to be the biggest hurdle for channel adoption.
Interestingly, we continue to see online purchases associated with different occasion timings. Online liquor purchases are often seen to be skewing towards dinner occasions, with online occasions serving different needs and occurring more frequently than bricks and mortar occasions. Online consumers are driving over two times more value versus the industry average, with a consumer value index of 188 compared to the average big box consumer at 90.
We’ve seen a higher price per unit is a key driver of online liquor’s value growth, especially with beer, cider and RTD seeing heavy bulk-buying influence. Gifting also continues to be a major driving force of value and premiumisation online. Despite still making up only four per cent of online liquor purchase occasions, gifting continues to heavily over-index in online transactions. Major retailer Dan Murphy’s has recognised this potential, launching a dedicated gifting hub in 2021 that enabled businesses to gift hundreds of clients, staff and friends within minutes, with a one click upload of a recipient list, propelling online sales for the retailer and cementing online leadership for Endeavour Group in 2021.
We’ve seen online consumers tend to be more explorative and consumers skew towards male and young families, as the online channel provides an inherent opportunity to connect with consumers who are looking to discover more about liquor offers. This has increased the tendency for incremental purchases – 25 per cent of online shoppers reported not needing a specific liquor product, but deciding to purchase when browsing online.
In terms of online preferences at the moment, buyers gravitate towards Dan Murphy’s, with 42 per cent of online consumers shopping at the retailer’s site in the last six months. But Coles Liquor banners (+ seven percentage points) and Boozebud (+ five percentage points) are both seeing the strongest year on year uplift. We have seen increased fragmentation from online liquor retailers with the rise of Jimmy Brings, Cellarmasters, Good Pair Days and Hairydog, among many others.
In terms of categories, wine continues to overindex with online sales versus other categories. Despite slower YOY dollar growth, the category makes up nearly 40 per cent of total online liquor sales, with growth starting to slow as other categories including beer and RTD drive strong double digit growth in online sales. When drilling down into liquor formats, Champagne and single malt whiskies notably over-index in online share, with prominent online premiumisation influences evident.
Next week, IRI is holding its annual virtual State of the Industry webinar, which will explore a range of key areas for Australian retailers and manufacturers.
The online event will cover topics such as the current challenges and opportunities in the aftermath of the global pandemic, driving growth in an inflationary environment, and the evolution of trends, amongst many more.
Get informative retail insights on a wide range of topics from IRI’s expert panel at its annual State of the Industry virtual event next Wednesday, 9 November. Register for the free event here.
This article appears in the November issue of National Liquor News, available in print and online soon. Subscribe to our newsletter here to get it to your inbox.
- Australian Bureau of Statistics (ABS); 12 months to December 2021 vs. 12 months to December 2020; *Includes physical retail and online; **online transactions only
- IRI Shopper Panel, *IRI All Outlets, 52 Wks to 02/01/22
- Growth Scope 1/1/2021 – 31/12/2021
- IRI LiquorLens Shopper Survey, December 2021, n = 1,334